Securities and Exchange Board of India (SEBI) has released a consultation paper proposing changes to the price discovery mechanism used during the pre-open call auction session for IPO and re-listed stocks.
The market regulator said the review aims to improve price discovery and address concerns over artificially suppressed pricing in certain re-listed shares due to existing dummy price bands and base price mechanisms.
SEBI noted that in some cases a large number of buy orders were rejected during the call auction session for being outside the permitted price range, leading to continued upper circuit hits after listing.
The regulator has proposed revising the methodology for determining the base price of re-listed stocks, especially where trading resumes after long suspension periods. It has also suggested a more uniform and immediate mechanism for flexing dummy price bands across stock exchanges.
The proposals were discussed with SEBI’s Secondary Market Advisory Committee, which recommended continuing the existing dummy price band system while improving the methodology for determining realistic base prices.
SEBI has invited public comments on the proposals until June 11, 2026.
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